Introduction

Over US$24.5 billion of development aid is targeted at Small and Medium Sized Enterprises (SMEs) and donor interest is increasing; yet the development benefits of targeting small enterprises are controversial. This page explores the debates in more detail, and lists key resources on the topic.

Small enterprises provide a large share of employment in low-income countries but their contribution to job growth is driven by a few fast-growing businesses. Given the lower survival rates of small enterprises, they create similar amounts of jobs as large ones.

Combining finance with management training has helped increase incomes of small business owners; yet, long-term effects on productive growth may require support to small but high-growth entrepreneurs, and improving the market systems in which they operate.

The set-up of an SME promotion agency, which channels all government support to the sector, has proven more efficient than spreading resources over various support organisations.

Entrepeneurship and Economic Development: Theory, Evidence and Policy, IZA, 2013. This paper provides an overview of the state of the art of the intersection of development economics and entrepreneurship. It deals with (i) recent theoretical insights; (ii) empirical evidence; and (iii) fresh insights for entrepreneurship policy that emerges from recent advances in this area, including female entrepreneurship.